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Eyes on Trade is a blog by the staff of Public Citizen's Global Trade Watch (GTW) division. GTW aims to promote democracy by challenging corporate globalization, arguing that the current globalization model is neither a random inevitability nor "free trade." Eyes on Trade is a space for interested parties to share information about globalization and trade issues, and in particular for us to share our watchdogging insights with you! GTW director Lori Wallach's initial post explains it all.

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May 03, 2010

Trade Tribunals: The Canary in the Mine?

“Mining for Profits in International Tribunals,” a report recently
released by the Institute for Policy Studies, presents evidence that
transnational corporations are litigating for profit in trade tribunals such as
the UNICTRAL (United Nations Commission on International Trade Law) and the ICSID (International Centre for
Settlement of Investment Dispute). In
the process, court rulings favoring corporations are undermining countries’
ability to implement important health, environmental and public safety policies.This gross usage of the tribunals points to
the disturbing role that our current trade agreements have in sacrificing the
public welfare for the corporation’s profit margin.

The report, which examines the international trade tribunal
framework, details how transnational corporations like Chevron and the Pacific Rim are increasingly using tribunals to gain millions
dollars in profit by bringing cases against host countries.Many of these cases evolve around
allegations of “lost profit” due to a country’s environmental or health
standards. For example, in February 2010 the Canadian mining firm Blackfire
Exploration reportedly threatened to sue Mexico
due to its closing of an open pit barite mine in Chiapas.The mine had been ordered to be closed by officials due to its
detrimental environmental and health effects. Sources suggest Blackfire
threatened officials with an $800 million dollar claim of compensation!

Leaders need to take notice of the trend this report reveals
about the larger international trade regime, as these courts are supported by a
system of free trade agreements (FTAs) and bilateral investment treaties
(BITs). The report concludes by saying there tribunals are “just one
illustration of the imbalance in the current rule that govern international
investment.”

This phenomenon should be the canary in the mine for today’s
leaders and serve as a warning about the need to reform the current trade
regime, remedy this imbalance and in the end promote public welfare – not
corporate profits.